GST Free’ Goods for Outgoing International Tourist

Second Anniversary of GST brought gift for outgoing International Tourist. Notification No. 11 /2019 – Central Tax (Rate) dated 29th June 2019 specifies retail outlets established in the departure area of an international airport, beyond the immigration counters, making tax free supply of goods to an outgoing international tourist, as class of persons who shall be entitled to claim refund of applicable central tax paid on inward supply of such goods, subject to the conditions specified in rule 95A of the Central Goods and Services Tax Rules,2017. This notification shall come into force with effect from the 1st day of July, 2019. Detailed procedure and process for availing benefits of this notification was issued by CBIC through Circular No 20/16/04/2018-GST dated 29th June 2019 .

Now Retail outlets established at departure area of the International Airport beyond immigration counters can avail refund of taxes paid on inward supply of indigenous goods supplied to outgoing international tourist subject to certain conditions. Therefore, these retail outlets will supply such indigenous goods without collecting any taxes from eligible passengers and may apply for refund as prescribed. Below mentioned conditions must be fulfilled to avail the benefit of notification no 11/2019- central Tax

  • Retail Outlet establishment to be located at departure area of International Airport beyond immigration Counter.
  • These Retail Outlets should be registered under GST and have a valid GSTIN
  • Outgoing International Tourist( Eligible Passenger) means a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non- immigrant purpose.
  • Goods supplied to such person against Foreign Exchange
  • The procedure and applicable rules as specified under Customs Act are required to be followed for procurement and supply of such goods.

Procedure for claiming Refund

Such retail outlets , established at departure area of the international airport beyond immigration counters  shall be entitled to claim a refund of all applicable Central tax, State tax, Integrated tax, Union territory tax and Compensation cess paid by them on all inward supplies of indigenous goods received for the purposes of subsequent supply of such goods to the eligible passengers subject to following conditions:

Maintenance of Records: The records with respect to duty paid indigenous goods being brought to the retail outlets and their supplies to eligible passengers shall be maintained as per Annexure A (issued in circular No20/16/04/2018-GST) in electronic form. The data shall be kept updated, accurate and complete at all times by such retail outlets.

Invoice Based Refund: The refund to be granted to retail outlets is not on account of the accumulated input tax credit but refund is based on the invoices of the inward supplies of indigenous goods received by them. The supply made by such retail outlets to eligible passengers has been exempted vide notification No. 11/2019-Integrated Tax (Rate) and 01/2019-Compensation Cess (Rate) both dated 29.06.2019 and therefore such retail outlets will not be eligible for input tax credit of taxes paid on such inward supplies and the same will have to be reversed in accordance the provisions of the CGST Act read with the rules made thereunder. It is also important to note that no refund of tax paid on input services, if any, will be granted to the retail outlets.

Maintenance of Documents/ Declarations & Display:

(a)Details of the Passport (via Passport Reading Machine);

(b) Details of the Boarding Pass (via a barcode scanning reading device);

(c) A passenger declaration as per Annexure B;

(d) A copy of the invoice clearly evidencing that no tax was charged from the eligible passenger by the retail outlet. (e) Such retail Outlets will be required to prominently display a notice that international tourist are eligible for purchase of goods without payment of domestic taxes.

Procedure of filing Refund Claim

Till the time the online utility for filing the refund claim is made available on the common portal, these retail outlets shall apply for refund by filing an application in FORM GST RFD-10B , to the jurisdictional proper officer. Refund Application in Form GST RFD 10 B shall be accompanied with the following documents:

(i) An undertaking by the retail outlets stating that the indigenous goods on which refund is being claimed have been received by such retail outlets;

(ii) An undertaking by the retail outlets stating that the indigenous goods on which refund is being claimed have been sold to eligible passengers;

(iii)Copies of the valid return furnished in FORM GSTR – 3B by the retail outlets for the period covered in the refund claim;

(iv)Copies of FORM GSTR-2A for the period covered in the refund claim; and 

(v) Copies of the attested hard copies of the invoices on which refund is claimed but which are not reflected in FORM GSTR-2A.

Processing & sanction of Refund by Department

Upon receipt of the complete application in FORM GST RFD-10B, an acknowledgement shall be issued manually by the proper officer within 15 days of the receipt of application in FORM GST RFD-02.

In case of any deficiencies or any additional information is required, the same shall be communicated to the retail outlets by issuing a deficiency memo manually in FORM GST RFD-03 by the proper officer within 15 days of the receipt of the refund application. Only one deficiency memo should be issued against one refund application which is complete in all respects

After scrutinization of all related details and documents submitted by claimant, proper officer shall issue refund order manually Form RFD 06 along with the manual payment advice in Form GST RFD-05

Conclusion:

It’s excellent opportunity for retail outlets (located at departure area of International  Airports beyond immigration counters), to boost their sales by offering tax free supplies to International Tourist and simultaneously International Tourist( Eligible passengers) also get benefit of buying tax free goods . Of course! initially cost and time is involved in maintenance of records and claiming refunds. Once online filing of refund and automatic system of getting refund will be adopted, this exemption will get overwhelming acceptance.

Source: Circular CBEC-20/16/04/2018-GST

Contributed by CS Payal Kataria

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